The Fate of General Motors

Interesting article in BW about GMs current financial crisis and the fate of its future. Particularly within the last 6 months, the books have gone from really bad to frighteningly scary. Some see a potential merger with Chrysler – a monopoly in my view (of financial and managerial failure) – others wonder of a GM bailout, some just see GM as we know it, going the way of the do-do.

The GM 5-point [failed] Plan:
Goals:
- Increase GM US Market to share to 33%
- Improve customer satisfaction as evidenced by points of market share, not fractions

Strategy:
- Implement innovate and proven marketing techniques
- Raise market share 1 percentage point in each of 5 key areas [customers, dealers, employees, salespeople, retirees]
- Remake corporate image as a leader by acting rather than re-acting
- Change focus of advertising from distress to aspirational

Note: GM adds that loss of market share experiences is the result of diminished image of GM in the marketplace. [no kidding]

Let's briefly talk about the success of it's 5-point plan...Almost every one of GM's vehicle lines has lost market share since 2000 if not earlier (except Cadillac which actually had a lift between 2000 and 2008). While most vehicle warranties have been improved, GM vehicles simply aren’t built as well as Honda, today’s Toyota, or even Ford (while they also have their problems).

GMs non-SUV/Sport utility market share in the US went from 42% back in 1970 to just 22% in 2005, while Honda and Toyota each went up 14 and 11% respectively. By 2007, GM shares sank another 2.5%.

Some would agree that GMs globalization strategies in the last few years, trying to combat the movement of DaimlerChrysler and Ford in Europe and China, have been ‘questionable’ as well and, for many parts, undermining due to poor product lineup.

Looking at the goals and strategies laid out in the 5-point plan, it's fair to say they've fallen short on just about every bullet point (though Hummer and Cadillac divisions did come out with some nice ads thanks to Mondernista and other agencies..). But, 33% market share? How realistic was that given the steady sales decline, changes in environmental concerns, changes in gas and oil prices, not to mention resource allocations (manufacturing warehouse locations, suppliers and parts), management and union-issues bloating the company? Not very. That's quite a list of things prohibiting a flailing company of GMs size from regaining their once 33% foothold in the market. Even the most brilliant marketing tactics won't overcome management ignorance, poor quality parts at higher prices, or the $60 it costs to fill up your tank twice a week.

So how does GM stay afloat?
Can a private equity investor or billionaire financier buy-out the fallen company and turn it around (like Kirk Kerkorian who has knocked on GM’s door more than once already)?

Should GM focus solely on it’s legacy lines and sell-off everything else?

Since the popular thought movement to hybrid-thinking and “green technology”, and growing aversion to concepts like “gas-guzzling” and “air-polluting” vehicles, will demand for SUV’s and sport utilities – the bulk of GMs former cash flow – ever come back?

Finally, who’s to blame? UAW – Rick Wagoner and the GM Board - management at all levels – or, the shareholders?